Gaucho considers closing Cau branches as part of restructure

UK-based Argentine restaurant chain Gaucho has mooted plans to close branches of subsidiary Cau as part of an effort to restructure.

Who is Gaucho?

Gaucho is a London-based, Argentina-themed restaurant group that is responsible for administering 16 venues across the capital.

In 2010, Gaucho launched a casual dining sub-brand named Cau, which specialises in beef dishes including steak, steak sandwiches and burgers. Cau grew quickly, with 22 new restaurants opening nationwide.

Six years later, Equistone (a private equity firm) purchased the Gaucho group, after originally backing a management buyout in 2005. Earlier this year, Gaucho hired former Maplin boss Oliver Meakin. Maplin filed for administration in February 2018.

However, with the performance at the core Gaucho restaurants said to be in line with expectations, the company has said these venues are likely to be safe.

Why is Gaucho considering closing Cau branches as part of restructure?

For over a year, Cau has recorded double-digit falls in sales. Though Gaucho has yet to set out its preferred route, management is thought to be looking to restructure using a CVA.

Cau has been subject to a host of external forces in recent months, as have many other major restaurant chains. These forces include:

High levels of competition

Restricted consumer spending (due to inflation outstripping wages)

Increasing business rates

Rising minimum wage costs

Gaucho has announced that KPMG has been appointed in order to assist them in appraising their options.

A spokesperson for Gaucho commented: "As part of a comprehensive strategic review, the group’s new management team, with the support of its shareholders, is at the early stages of exploring a number of financial restructuring options. No decisions have yet been made."

How does this move reflect the wider restaurant industry?

Last week, Côte announced that it was considering closing a number of its Jackson + Rye and Limeyard restaurants. Elsewhere, a host of other restaurant chains – including Byron Burgers, Jamie’s Italian, Prezzo and Chimichanga – have sought to use CVAs to close branches.

Calling for expert support now will give Gaucho the best possible chance of staying buoyant long-term. Make sure you initiate action to restructure and retrieve your company’s situation before it's too late.

Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA.

The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders.